The observatory, based in a two-storey wooden lodge that opened to visitors in 2011, was razed to the ground after a fire broke out on Sunday morning and quickly took hold.

Extra fire crews were brought by coastguard helicopter and RNLI boat from Shetland to supplement the island’s volunteer fire crew, who had been fighting to contain the flames. Smoke from the fire could be seen from Sumburgh hotel on mainland Shetland, 30 miles north.

The couple who run the observatory and guesthouse, David Parnaby and Susannah Parnaby, escaped unharmed from an adjoining flat with their two children and are being rehoused on the island.

The observatory, founded in 1948, is famous among ornithologists for its remarkable sea birds and rare migratory birds, and is one of the world’s most important research stations.

Fair Isle, which is 4.8km (3 miles) long and 2.4km across with sea cliffs nearly 200m high, sits midway between Orkney and Shetland. Also famous for its distinctive style of knitting, about 55 people live there, often cut off by severe storms during the winter.

Avid birdwatchers will fly to Fair Isle in the hope of seeing Siberian species such as the lanceolated warbler, Pallas’s grasshopper warbler or Siberian bluethroat, said Roy Dennis, the observatory’s honorary president and former warden. It holds the UK record for the most “first sightings” of rare birds.

Describing the fire as “absolutely appalling”, Dennis said: “Today is about how we get up and running again.”

He added that the observatory trust’s directors held an emergency telephone conference on Monday morning to discuss the fire, rehousing the Parnaby family and pressing on with replacing the building. “I think we should get on with it as quickly as we can,” Dennis said.

The building, a modular design sourced from Orkney and built over the summer of 2010 at a cost of £4m, was fully insured.

They needed to wait for the fire master’s report into the cause of the fire and an investigation by the insurance company’s loss adjusters before making a final decision, but the most obvious option was to rebuild it using the same design and methodology, Dennis said.

The observatory’s research records and archives, which include bird observations dating to the early 1900s, have been digitised. After years of dependency on diesel generators for much of its power, Fair Isle’s electricity supply was switched to renewables last year, thanks to new solar panels and wind turbines.

With the exception of the observatory’s site, Fair Isle was gifted to the National Trust for Scotland (NTS) in 1951 by its then owner and founder of the observatory, George Waterston, and is also home to a ranger with Scottish Natural Heritage, the government conservation agency.

Opened from April to October, the guesthouse had room for 30 visitors, Dennis said. Many bird lovers returned and formed strong bonds with the islanders.

“It doesn’t feel like a hotel. It feels more like you’ve joined a family,” he said.

Patrick Duffy, the chief operating officer for NTS, said: “We were deeply sorry to hear of the destruction caused by the fire at the Fair Isle bird observatory yesterday. However, we are relieved to have confirmation that no one was hurt as a result. The trust is ready and willing to help in any way we can.”